The Daily Start-Up: Auditor Questions Solyndra’s Viability

This morning’s roundup of the latest venture capital news and analysis across the Web:

Art by Mike Lucas

Solyndra Inc., a thin-film solar panel maker, has encountered what could be a hurdle to its plans to go public, VentureWire first reported. Its auditor, PricewaterhouseCoopers LLP, filed a notification expressing “substantial doubt” about Solyndra’s ability to continue as a going concern. The statement was added to an updated filing with the Securities and Exchange Commission after an audit of the company’s financial status as of Jan. 2. “The company has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders’ deficit that, among other factors, raise substantial doubt about its ability to continue as a going concern,” the firm wrote in the filing. The Fremont, Calif.-based company, which has raised nearly $970 million in venture capital, registered to go public in December 2009.

In yet another sign of venture industry shrinkage, veteran investor Venrock Associates is in the market with a sixth fund that is significantly smaller than the prior $600 million pool it collected in 2007. The new fund’s target is $350 million, VentureWire reports, citing people familiar with the situation. Venrock began life as the venture arm of the Rockefellers, but has since expanded its base of limited partners.

As VCs’ wallets get thinner, Knewton founder and Chief Executive Jose Ferreira has some thoughts on getting them to part with their cash. He has a list of five essentials, including a big market with favorable dynamics. Much of it has been said before, but, times being what they are, it’s worth repeating.

Comments (3 of 3)

I'm doing a project on Solyndra and trying to identify the company's main strategic issues and then develop recommendation for the company. Obviously, the company needs to ensure completion of its second production facility by raising additional funds, which, in turn, will lower the company's cost of revenue. Also, it is important for Solyndra to convince customers that its high efficiency product is worth a premium. Does anyone have specific suggestions for Solyndra moving forward? Are there any other key issues I'm not considering?

10:12 am April 5, 2010

GlassManDave wrote:

Isn't this the best thing that can happen to them? The date just got really cheap and is still gonna perform like a rock star in bed. What else can you ask for? Seriously, this preemptive going concern notice just dropped the IPO price by 30-50%. That will bring in more buyers. Cinderella is going to the ball and she will dance.

11:37 am April 2, 2010

R Nuts wrote:

Given the auditors comment below, I have a question:

Quote: “The company has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders’ deficit that, among other factors, raise substantial doubt about its ability to continue as a going concern,”

Question: Are they all nuts? Really nuts?

I understand investment bankers want to take this one out, as do the VCs, but how much lipstick can you possibly buy? Certainly not enough for this pig. I think that "everyone" would be much better off if they pulled their filing and reflected a bit.

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